Your prompt and finely balanced editorial, “A positive surprise” (September 3) must serve as an aide-memoire for the government and a cautionary note about reining in the celebrations for the superb Q1 GDP growth rate. Admittedly, it is a great achievement and vindication of the government’s unflinching stand on the long term good effects of demonetisation and the Goods and Services Tax. Despite severe criticism of both the drastic measures — especially the vicious attacks on demonetisation, mostly prompted by those with hordes of black money — the government maintained a sustained optimism in the inherent good in both these measures; and the 8.2 per cent GDP growth in Q1 has indeed come in as a positive endorsement.
Even more important than the overall figure are the facts that — as you have stated — “some of the additional impetus to growth came from agriculture” and “the other big component of growth is in manufacturing”. For long these two sectors have been a drag on GDP growth, and a cause for serious worry. If these two components of the GDP are showing signs of revival — notwithstanding the slowdown in the services sector — we are probably actually headed for achhe din. Our services sector, with its inherent strengths and robust infrastructure, will perk up soon. And once all three sectors tango, we can hope for some sustainability in the GDP growth.
You have done well to caution the government about the (i) advantage of a significant base effect (ii) rural distress being far from over (iii) uncertain forward trajectory of oil prices and (iv) the most crucial importance of maintaining fiscal discipline by not giving into the temptation of populist spending. Hopefully this will serve the government, and the ruling party, well in taking the right decisions. Because the mature Indian voter is going to endorse development and growth above any other consideration.
Krishan Kalra Gurugram
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